International Business Machines Corporation IBM recently announced an expanded partnership with automobile giant, Daimler DDAIF, to host the latter’s global after-sales portal on the IBM public cloud.
Per the terms of the deal, Daimler will leverage IBM’s platform, which is based on the IBM Cloud Kubernetes Service. This will enable Daimler to increase agility and scale operations per the needs of the business. It will also be able to quickly launch new products to meet user demand.
Moreover, IBM’s public cloud features strong security capabilities like the IBM Hyper Protect Services. Thus, hosting the portal on IBM’s platform will aid Daimler protect its sensitive data against security breaches and hacking attempts.
The Daimler deal is a notable win for IBM as it emphasizes strength of the company’s public cloud platform and is anticipated to boost the company’s cloud revenues in the coming quarters.
Also, expanding clientele is expected to boost investors’ optimism in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of IBM have declined 11.6% year to date compared with the industry’s fall of 14.5%.
International Business Machines Corporation Price and Consensus
International Business Machines Corporation price-consensus-chart | International Business Machines Corporation Quote
Robust Adoption to Drive Top-Line
IBM has been witnessing solid traction for its cloud services courtesy of the digital transformation taking place across all industries.
Recently, Tata Consultancy Services (TCS) expanded its partnership with IBM to aid clients accelerate their digital and cognitive enterprise transformations to IBM public cloud by leveraging IBM Cloud Paks.
Moreover, Banco Sabadell selected IBM public cloud to help facilitate its digital transformation requirements and support the strategic evolution of its business model with IBM cloud capabilities. The company will also leverage Red Hat Enterprise Linux to modernize applications and provide superior services to its clients.
IBM inked a deal with Spain’s CaixaBank to help accelerate its hybrid cloud transformation. CaixaBank will also leverage IBM Cloud Pak and Red Hat OpenShift to roll out innovative solutions to enhance customer experiences.
These client wins showcase growing demand for IBM’s services, which are expected to drive the top line over the long haul. Notably, the company’s total cloud revenues increased 19% year over year to $5.4 billion in first-quarter 2020.
The momentum is likely to continue in the upcoming quarters driven by the coronavirus-led remote work wave, which has made it necessary for companies to overhaul operations to meet the needs of a changing work environment.
Moreover, the growing traction for its solutions will likely aid IBM expand its footprint in the public cloud market, which per Grand View Research data, is anticipated to witness a CAGR of 14.6% between 2020 and 2027.
Competitive Scenario
Nevertheless, IBM is facing stiffing competition in the cloud services space from industry stalwarts like Amazon AMZN and Microsoft MSFT.
Notably, Amazon’s cloud computing arm Amazon Web Services (AWS), AWS was recently adopted by IHS Markit to host the majority of its data processing infrastructure, corporate platforms, and end user applications. Formula 1 also selected AWS to introduce new real-time racing statistics throughout the 2020 season. These major deal wins highlight the ongoing momentum of the AWS platform.
Meanwhile, Microsoft’s cloud platform Azure, is slowly gaining ground as well. The platform was recently selected by Johns Hopkins Medicine to power its inHealth precision medicine initiative which aims to drive innovation in disease management and patient care. Moreover, in April, Blackrock announced a deal with Microsoft to host its Investment management platform — Aladdin — on Azure cloud.
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